Can European Green Deal Provide a Just Transition?

Sebastiano Sabato and Boris Fronteddu, Researchers from European Social Observatory (OSE) published a report titled “A socially just transition through the European Green Deal?”. In the report, Sabato and Fronteddu argue whether the European Green Deal can provide a just transition. EKOIQ interviewed Sabato and Fronteddu about their report.

Interview: Burcu Genç

In your study, you noted that green growth should be accompanied by a just transition in order to achieve sustainable development. The European Union aims to be climate neutral by 2050 through the European Green Deal (EGD) roadmap. However, as you address in your paper, “there are no references to inequality in the [EGD] document and few notions to social rights”. In your opinion, what are the “misfits” between EGD and Just Transition?

Sebastiano Sabato: The European Green Deal is meant to be the growth strategy of the European Union for the years to come. The fact that its primary objective is to fight climate change by developing an economic model based on zero net emissions of greenhouse gases by 2050 is certainly a breakthrough compared to previous EU growth strategies. Achieving these objectives would entail huge transformations in European economies and societies, including changes in the ways we produce and consume, build and renovate buildings to make them energy-efficient, commute or travel. While these changes are expected to create opportunities that will enhance citizens’ well-being and foster economic growth, they will also have significant financial and social costs. In the European Green Deal, there is a fair amount of awareness of the fact that the costs and the opportunities deriving from the transition towards such an economic model will differ across European countries and regions, economic sectors and social groups. The European Commission seems also aware that, in order for the transition to succeed, it should be ‘just,  i.e., managed in a such a way that costs and opportunities are shared in a fair way, making sure that ‘no-one is left behind’. In this sense, the EGD is largely in line with the notion of just transition as used by the trade union movements over the years and by the International Labour Organisation.

This said, in our study we also identify some potential misfits between the EGD and the notion of just transition. In some cases, the latter is indeed interpreted in a rather narrow way, which could entail the risk of limiting the suitability of the EGD as a policy framework ensuring a just transition for all. First, as for concrete instruments to achieve just transition, the EGD has a marked territorial approach: the main proposals are to create a Just Transition Mechanism and a Just Transition Fund supporting those European regions and economic sectors that will be most affected by the transition to a zero-carbon economy such as, for instance, regions whose economy significantly relies on the coal industry. Second, in the EGD the emphasis is on measures to help workers to adapt to the requirements of a greener economy, for instance by enhancing education, training, skills-development opportunities and active labour market policies. However, while providing extra-help to specific territories and developing measures to enhance workers’ employability are key components of the notion of just transition, the latter is much broader. Indeed, the green transition will affect the European society as a whole and the inequalities that are likely to arise or to be exacerbated as a consequence of the transition go beyond access to the labour market. So, the territorial-targeted and employability-enhancing approach to just transition taken in the EGD should be put more firmly in the broader framework of comprehensive and strong welfare systems ensuring the protection of the social rights of all European citizens. A third potential limitation is that, in the EGD, the focus is obviously on ensuring a just transition in the European Union. While restating that the EU is willing to lead the initiatives against climate change as well as the promotion of sustainable growth at global scale, the fact that decisions taken by the EU and its Member States could have implications outside their borders – especially in developing countries – should be given more attention. Indeed, a just transition towards environmentally sustainable economies and societies should be an objective to be achieved at the global level and initiatives taken at the regional, national or local levels may have impacts beyond those levels. These potential impacts (either positive or negative) should be carefully considered.

In your paper you provide some suggestions to reduce the risks of these misfits. Some of these suggestions are cooperation between institutions, reporting, policy integration and coordination. Could you please elaborate the actions that should be taken and the ones that should be avoided to reduce the risks?

Sebastiano Sabato: We referred to potential misfits between the European Green Deal and the notion of just transition because, actually, in the EGD there are already some possible solutions to these limitations. For instance, while it is true that references to inequalities and to social rights are scarce in the Commission Communication on the European Green Deal, it is also true that, in the same document, the European Commission calls for a full implementation of the European Pillar of Social Rights, a high-level document that contain a comprehensive list of social rights and aims to address the social inequalities in the EU. The principles and rights of the Pillar apply to all EU citizens and they go well beyond rights linked to the access to the labour market, also including, for instance, the right to effective social protection and inclusion provisions for all, or the right to essential services such as energy, water, sanitation. The European Pillar of Social Rights is thus expected to be a reference framework to ensure that nobody is left behind in the transition, irrespective of their employment status or geographical residence. Looking beyond the EU, it is important to note that, while the European Green Deal primarily concerns the Union, it should be seen as an integral part of the EU strategy to implement the United Nations’ 2030 Agenda for Sustainable Development and the Sustainable Development Goals. EU actions on sustainable development also include EU cooperation with third countries assessing the impact of the decision taken within the EU on the sustainable development of other countries (on the basis of the so-called European Consensus on Development).

The big challenge for the future is how to make sure that decisions taken by the EU through these instruments, policies and processes – the EGD, the European Pillar of Social Rights, environmental policies, cooperation and development policies, just to mention a few – contribute to the objective of a socially just transition within the EU and beyond its borders. Eventually, it is a matter of ensuring coherence and integration between decisions taken in the economic, environmental and social spheres by a big number of institutions and stakeholders (public and private) operating at different territorial levels. There are no easy solutions to achieve this. A possible way forward could be to link more closely the EGD  – and, more generally, EU policy-making – to the UN 2030 Agenda and its SDGs, the latter being a global framework aiming to promote a universal pattern of development balancing economic growth, environmental protection and social progress. Indeed, the notion of just transition as proposed by the International Labour Organisation is closely linked to the notion of sustainable development and to the 2030 Agenda, and promoting sustainable development within the Union and worldwide is one of the objectives of the European Union as stated in EU Treaties. An important step in this direction was taken in 2020 with the decision to modify the process through which the EU takes decisions in the field of economic and social policies (the European Semester) by including environmental considerations and emphasising the notion of sustainability and the SDGs. This has allowed reflecting on how EU economic and social policies could contribute to achieving the SDGs and it is important that this reflection process continues in the new EU socio-economic governance framework set up as a reaction to the COVID –19 pandemic.

The “democracy deficit” has always been debated throughout the history of European Union. The European Parliament’s role grew stronger to reduce the democracy deficit. However, we also observe that there are some conflicts among EU institutions; for instance, the Climate Law that was passed by the European Parliament set a 60 percent emission reduction by 2030 target whereas the European Commission suggested only 55 percent. In your study, you suggest “adopting a systemic, whole of government approach ensuring the participation of all relevant institutional actors and stakeholders” and implementing the EGD through the European Semester. In your opinion, will the “democracy deficit” debates continue during the implementation of the EGD?

Sebastiano Sabato: The European Union is a very complex, and unique, political system: neither a traditional nation state, nor an international organisation. The repartition of competences between institutions and levels of government is articulated and a variety of decision-making procedures do exist, according to the policy areas in question. The EU and its core institutions – the European Commission, the European Parliament, the European Council and the Council of Ministers –  have strong democratic credentials that are derived from EU Treaties and their structures. This said, it is obviously possible to discuss many features of the EU institutional and decision-making systems: debates on how to address existing shortcomings and improve the quality of EU democracy have been ongoing for a long-time and they will continue in the future.

Nevertheless, the example you make of the process for approving the Climate law is an example of ‘democracy at work’. There are disagreements among EU institutions about the emission-reduction target and different point of views on this do exist also within the European civil society itself; trade unions, business organisations, NGOs and citizens have different opinions and interests. There is an ongoing debate and, ultimately, decisions will be taken according to the procedures foreseen by the Treaties. This said, it is clear that, given the importance of the issues at stake and the fact that it is unlikely that the green transition will succeed without a large consensus and support from citizens, it would be particularly important for the debate on the implementation of the EGD to be transparent and inclusive, and to use fully all of the existing venues and procedures that enable the citizens and stakeholders to be involved in the EU decision-making process. The Semester offers some occasions to promote exchanges between institutional actors and stakeholders, but there are also many other venues and procedures such as the European social dialogue that should be exploited as much as possible. The debate on the implementation of the EGD will nevertheless be characterised by the emergence of different opinions and interests, including people, political parties and organisations that will openly question the legitimacy of EU decisions. Eventually decisions will be taken by the Union and its Member States according to EU and national laws and, and inevitably some positions will prevail, others will be defeated and there will be many compromises.

More importantly, there were many discussions on who should be funded through the COVID-19 financial recovery packages. Climate activists pressured the European Commission to prevent it from funding fossil fuel subsidies. Even though the pressure seemed successful, the just transition fund was reduced by 22.5 million euros (from 40 million euros to 17.5 million euros) and the plan seems to depend on the private sector. Would you like to comment on this? And do you think that the private sector will protect workers, or will they achieve a “just transition”, especially from a social rights perspective?

Boris Fronteddu: I would not say that climate activists actually prevented fossil fuel financing through funds that were released as part of the recovery plan. For example, according to the NGO network Fossil Free Politics^[1], by June 2020, 7 billion in cash had already been allocated to the fossil fuel industry through the Pandemic Emergency Purchase Programme of the European Central Bank. This is likely to have a long-term impact on the possibility of achieving the EU’s CO2 emission targets. At the same time, the urgent aid schemes allocated in the context of the pandemic have also been granted to carbon-intensive companies, for instance to the airline industry.

The decision of the European Council to slash the budget for the Just Transition Fund, which was proposed by the Commission, shows that the willingness of the Member States to seize the window of opportunity generated by the pandemic to implement a ‘just transition’ appears, as it stands, limited. As one of the worst recessions since the Second World War lies ahead, the tension between limiting the recession’s socio-economic impact and implementing a holistic strategy to make the EU a climate-neutral zone by 2050 is likely to intensify. The European Council has agreed on a 672.5 billion euro Recovery and Resilience Facility that should contribute to the green and digital transition. It will be interesting to monitor the actual allocation of this budget in the light of the EU’s ‘just transition’ strategy. It should be noted that the Commission’s recovery plan “Next Generation EU” foresees that public investments made in the framework of the recovery should not be at the expense of the EU’s climate and environmental objectives.

Regarding the capacity of the private sector to participate in the green transition, several elements need to be taken into consideration. Firstly, the EU is working on a taxonomy of sustainable activities to encourage private investors to direct their funds towards sustainable economic activities. The precise modalities of this taxonomy are yet to be defined. Some NGOs already expressed concerns that activities that are actually harmful to the environment, such as the natural gas exploitation, will be labelled as “sustainable”^[2]. Secondly, the logic behind this taxonomy is a voluntary one. It is based on the hope that private investors will, voluntarily and collectively, change their behavior in order to actively participate in the transition. Voluntary processes concerning corporate governance, environmental and social practices have already been much debated in the context of corporate social responsibility. It is a strategy whose limits have already been demonstrated.

 Your report concluded that the European Comission should take into account the various interests of stakeholders and that this will undermine the consensus on the implementation of the EGD. Could you please elaborate on this?

Boris Fronteddu: The European Commission presents the Green Deal as a science-based policy (i.e. human activities are the main driver of climate change). If the latter is undeniable, the Green Deal strategy is also based on the hypothesis that it is possible to decouple economic growth and environmental degradation on a large scale. The Green Deal, as we have said, is at the same time based on the hope that private investors will rationally and collectively contribute to the green transition. These two assumptions are in fact more ideological than scientific. This is why, as the European institutions will be implementing policies linked to the Green Deal strategy, the ideological divides between the various stakeholders (political parties, trade unions, employers, NGOs, climate activists to name but a few) are likely to become more and more salient. This may, in turn, hinder the achievement of the goals of the European Green Deal since the European Commission intends to legitimise its long-term strategy by obtaining a broad consensus among stakeholders.

More fundamentally, the inevitable trade-offs between the social, environmental, and economic objectives of the EGD will rekindle the divergent interests between stakeholders. The recession caused by the pandemic is accelerating this phenomenon, putting the ‘just transition’ narrative to the test.

You can reach the full report from here.

Short bios

Sebastiano Sabato is a senior researcher at the Brussels-based research institute and think tank ‘European Social Observatory’ (OSE), where he has been working since 2014. He holds a PhD in Political Science from the Italian Institute for Human Sciences in Florence and his research interests include EU socio-economic governance, comparative social policy, ‘eco-social policies’ and sustainable development.

Boris Fronteddu has been working as a researcher at the European Social Observatory since April 2019. He has a master’s degree in European journalism and a further master’s in European politics and communication from the ‘Institut des Hautes Études des Communications Sociales’ (IHECS). Boris has mostly worked on international trade issues, such as the functioning of multinational businesses, free trade agreements between the European Union and third countries and sustainable development.

[1] https://corporateeurope.org/sites/default/files/2020-10/FFP_Covid_report_v5-pages.pdf

[2] https://reclaimfinance.org/site/en/2020/08/25/gas-nuclear-lobbies-eu-sustainable-taxonomy/